METALS-London copper hits 2-month low, China factory data drags
* Copper's break through key level points to selling next wk -traders
* Nearby zinc highness eases after deliveries to LME warehouses
* Coming up: euro zone Markit Manufacturing PMI at 0858 GMT
(Adds comment, detail; updates prices) SINGAPORE, March 1 (Reuters) - London copper fell to its lowest in more than two months on Friday following a more than 4-percent drop in February, with the outlook for demand hurt by disappointing economic data from China and worries over U.S. spending cuts. Growth in Chinese factories cooled in February to a five-month low, a government survey showed on Friday, missing market forecasts and underscoring the country's patchy economic recovery. Physical trade in top consumer China remains quiet after the Lunar New Year but should start improving this month, said analyst Sijin Cheng at Barclays Capital in Singapore. She added that the risk of headline-related sentiment swings would climb next week as China's government ministries start their first meetings of the new year. "Urbanisation is undoubtedly going to be top of the agenda because it is something the new leadership have been pushing," she said. But she noted that investment may not be as commodity-intensive as in the past as social aspects of urbanisation such as healthcare may be prioritised.
Three-month copper on the London Metal Exchange had dropped 0.45 percent to $7,779.75 a tonne by 0326 GMT, having earlier slid to the lowest since Dec 20 at $7,760 a tonne. Prices lost more than 4 percent in February, posting their biggest monthly drop in four. The most-traded June copper contract on the Shanghai Futures Exchange fell 1.59 percent to 56,780 yuan ($9,100) a tonne, having declined to its lowest in three months at 56,610 yuan a tonne. Asian shares edged down on Friday, with sentiment burdened stalemate, while the euro remained under pressure a day after notching its biggest monthly fall against the dollar in nine months. Markets were also looking to the U.S. where a day before sweeping budget cuts begin, the White House and Republicans blamed each other on Thursday for failure to prevent a fiscal crisis which the International Monetary Fund warned could slow the U.S. and world economies. "While the recent improvement in economic conditions has been clearly helpful for commodity prices, fresh economic impetus is needed," Credit Suisse said in a note to clients.
COPPER CHART BREAKDOWN Copper's close below its 200-day moving average on the final day of February could ignite fresh chart-based liquidation next week, traders said. "With the month ending on this weaker level there should be more selling likely next week," broker Triland said in a note. Meanwhile, nearby tightness in cash-March zinc <MZN0-H3> has eased after large deliveries into LME warehouses in New Orleans and Vlissingen this week, against a large outstanding short position, traders noted. <0#LME-FBR>
PRICES Base metals prices at 0326 GMT
Metal Last Change Pct Move YTD pct chg LME Cu 7779.75 -35.25 -0.45 -1.88 SHFE CU FUT JUN3 56780 -920 -1.59 -1.56 HG COPPER MAR3 350.50 -2.25 -0.64 -4.04 LME Alum 1998.50 -12.50 -0.62 -3.50 SHFE AL FUT JUN3 14730 -170 -1.14 -4.01 LME Zinc 2063.00 -2.00 -0.10 -0.02 SHFE ZN FUT MAY3 15460 -85 -0.55 -0.55 LME Nickel 16565.00 -40.00 -0.24 -3.44 LME Lead 2285.00 4.00 +0.18 -2.35 SHFE PB FUT 14960.00 -195.00 -1.29 -1.90 LME Tin 23376.00 -24.00 -0.10 -0.10 LME/Shanghai arb^ -129
($1 = 6.2213 Chinese yuan)
(Reporting by Melanie Burton; Editing by Joseph Radford)